Pure play lithium producer Pilbara Minerals has finished its financial year with production of a vital battery ingredient surging 64 per cent, as it prepares to explore new technology to add more value in Australia.
Pilbara Minerals chief executive Dale Henderson said the “cracking year,” when it produced about 8 per cent of global lithium supply, made the miner a large player in a small industry.
Pilbara Minerals chief executive Dale Henderson.
© Trevor Collens
In fourth quarter results released on Tuesday, annual revenue hit $4 billion, leaving the company with $3.3 billion in cash.
Production of spodumene concentrate – a key ingredient for batteries – was up 10 per cent for the three months to June, but the realised price dipped 33 per cent to $US3256 ($4805) a tonne. Even so, this was still way above the average of $US2382 a tonne in the 2022 financial year. Over the year, production rose 64 per cent.
“If you go back in time, to 2017 to 2018, a long run lithium pricing for spodumene was expected to be $US600 to $US700,” Henderson said
That was when Henderson joined the miner and a share cost about 50¢, before a share price surge starting in late 2020. On Tuesday, the shares jumped 5.2 per cent to $4.83 a share.
Henderson said Europe’s COVID stimulus and US President Biden’s administration had poured money into the energy transition.
“That really turned the whole electric vehicle space, and in particular lithium, from a China story to a global story,” he said.
Work is underway to increase the capacity of the Pilgangoora project from 580,000 tonnes of spodumene a year to 680,000, and earlier this year the Perth-based company committed to expand production to a million tonnes a year.
The spodumene contains between 5 and 6 per cent lithium, meaning about 95 per cent of the product shipped is not wanted by the customer.
“The world needs a better intermediate product than spodumene concentrates,” Henderson said.
Henderson wants to add value in Australia by concentrating the product more, but avoiding the cost and complexity of producing a battery-grade product like lithium hydroxide.
Pilbara Minerals and Australian environmental technology company Calix, backed by $20 million from the federal government, expect to soon commit to a midstream demonstration plant. It will test the feasibility of a new product that sits between simple mining and complex mineral processing, which historically has been difficult to do in the remote and expensive northwest of WA.
Pilbara Minerals is building a lithium hydroxide plant in Gwangyang in a joint venture with South Korean steelmaker POSCO.
The two firms came together after Pilbara Minerals offered up production in 2017 to attract a downstream partner and attracted just a handful of interested companies.
Now the miner has 300,000 tonnes a year of spodumene concentrate to feed another investment, and about 70 players are interested.
Australian lithium is contained in hard rocks, while the South American product is extracted from brine.
Buyers, especially car manufacturers, are increasingly focussed on the ESG – or environmental, social and governance – credentials of their inputs.
Henderson said Australia’s lithium ticked a lot of ESG boxes, with less water usage in a jurisdiction with stricter environmental regulation.
“However, it’s a very energy-intensive processing: drill, blast, mine, crush, mill, grind, etc,” he said.
Like the iron ore giants that neighbour Pilbara Minerals’ operation 120 kilometres inland from Port Hedland, it is planning to cut emissions with renewable energy, with details to be released later this year.
“We’re absolutely going to be taking decarbonisation steps as aggressively as we can,” Henderson said.
Northern Territory lithium aspirant Core Lithium’s share price suffered a 19.5 per cent fall on Monday and Tuesday after early lessons from the first months of production led to an outlook of higher costs and less production for this financial year.
The firm that owns the Finniss lithium mine revised guidance for its operating cost to between $1165 and $1250 a tonne, about triple what a 2021 feasibility study predicted. Problems encountered include mine closure during the wet season as water filled the pit and a need to reconfigure the mine plan to keep pit walls stable.
“We are continuing to better understand the Finniss ore processing characteristics and mine performance,” he said.
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